Decline in Life Insurance Subscription Rates... "Cancellations Increased Due to COVID-19"

Sangbo Association, 16th Life Insurance Tendency Survey
"Need for Support Such as Tax Benefit Expansion and Fee Restructuring"

[Asia Economy Reporter Oh Hyung-gil] The number of households with life insurance has decreased as cancellations of insurance policies have increased due to COVID-19.

According to the 16th Life Insurance Propensity Survey released by the Life Insurance Association on the 20th, the household life insurance subscription rate as of the end of June was 81.0%, down 5.0 percentage points compared to 2018.

Excluding post office insurance and Suhyup and Shinhyup, the subscription rate for private life insurance households also recorded 78.2%, down 5.5 percentage points from 2018.

An official from the Life Insurance Association explained, "This is due to poor sales performance caused by the reduction of tax benefits for pension and savings insurance in 2017, and the increase in life insurance cancellations due to the prolonged COVID-19 pandemic and economic recession." He added, "The low interest rates and the boom in investment markets likely influenced the decrease in preference for pension insurance and the increase in preference for investment-type products."

Since the COVID-19 outbreak, the number of life insurance contract cancellations has increased from 4,991,000 cases at the end of June 2019 to 5,613,000 cases in June last year, and recorded 5,589,000 cases in June this year.

Also, the average number of subscriptions per household for private life insurance was 4.3, and the average monthly insurance premium was 391,000 KRW, decreasing by 0.2 subscriptions and 56,000 KRW respectively compared to 2018.

According to a recent survey on the purpose of subscribing to private life insurance, the highest response rate was for "coverage of personal medical expenses in case of accident or illness" (75.8%), followed by "family livelihood protection in case of emergency" (44.3%), and "temporary income loss protection in case of disaster or traffic accident" (17.4%).

Regarding the preferred type of insurance agent when subscribing, "agents affiliated with insurance companies who specialize in their company's products" was the highest at 46.9%, followed by "independent agents handling products from multiple companies" at 22.9%, and "no preferred type" at 23.9%.

The proportion of people who experienced subscribing to insurance through digital channels such as the internet or mobile was 10.0%, with 19.2% having "only attempted to subscribe," and 70.9% having "no experience attempting to subscribe." The reasons for not attempting to subscribe included "finding it convenient to subscribe through an insurance agent" (39.7%) and "not knowing how to do it" (27.0%).

An official from the Life Insurance Association said, "Although the subscription rate for pension insurance, a representative product for retirement preparation, is low, there is potential demand for pension insurance as pension amounts do not meet expectations." He added, "It is necessary to encourage the early adoption of pension insurance culture through institutional support such as expanding tax benefits and revising commissions, especially targeting younger generations."

This content was produced with the assistance of AI translation services.